Correlation Between KNOT Offshore and Park Ohio
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Park Ohio at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining KNOT Offshore and Park Ohio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KNOT Offshore Partners and Park Ohio Holdings, you can compare the effects of market volatilities on KNOT Offshore and Park Ohio and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in KNOT Offshore with a short position of Park Ohio. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Park Ohio.
Diversification Opportunities for KNOT Offshore and Park Ohio
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KNOT and Park is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Park Ohio Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Ohio Holdings and KNOT Offshore is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on KNOT Offshore Partners are associated (or correlated) with Park Ohio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Ohio Holdings has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Park Ohio go up and down completely randomly.
Pair Corralation between KNOT Offshore and Park Ohio
Given the investment horizon of 90 days KNOT Offshore is expected to generate 1.96 times less return on investment than Park Ohio. In addition to that, KNOT Offshore is 1.0 times more volatile than Park Ohio Holdings. It trades about 0.04 of its total potential returns per unit of risk. Park Ohio Holdings is currently generating about 0.08 per unit of volatility. If you would invest 1,510 in Park Ohio Holdings on August 31, 2024 and sell it today you would earn a total of 1,694 from holding Park Ohio Holdings or generate 112.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KNOT Offshore Partners vs. Park Ohio Holdings
Performance |
| Timeline |
| KNOT Offshore Partners |
| Park Ohio Holdings |
KNOT Offshore and Park Ohio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and Park Ohio
The main advantage of trading using opposite KNOT Offshore and Park Ohio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Park Ohio can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Park Ohio will offset losses from the drop in Park Ohio's long position.| KNOT Offshore vs. USA Compression Partners | KNOT Offshore vs. Dynagas LNG Partners | KNOT Offshore vs. Crossamerica Partners LP | KNOT Offshore vs. Delek Logistics Partners |
| Park Ohio vs. Hurco Companies | Park Ohio vs. Enerpac Tool Group | Park Ohio vs. China Yuchai International | Park Ohio vs. Luxfer Holdings PLC |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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